A well organized Word document will make turning your work into a Kindle or print book far easier if you simply follow some basic suggestions.
Before you type the first word you should modify the Normal stye to your liking. Once it is set up the way you want it, make sure the body of your book uses the Normal style. You can override the Normal style with italics as needed, or indent text if needed (see my post on how to indent paragraphs). If a large part of your book is going to be in a completely different font (for example, you might want to emulate emails or text messages as part of your narrative), adjust the Normal style first and then create a new style with that as the base.
Right click the Normal style in the toolbar and choose Modify.
The first screen to appear will be the font selection screen. You can pick whatever font you are comfortable with. The beauty of using styles is that you can modify the style later to choose an appropriate font for book printing with just a few clicks. However, now you might want to choose a font good for the screen like the new Word default Aptos, or Verdana or good old Arial.
Once you've chosen your desired font and size, click the Format button and choose Paragraph.
The next screen will show the paragraph settings. You can leave the Alignment setting to Left, but the printed book will look better at Justified (the Kindle will automatically apply Justified alignment whether you want it or not). I would suggest you set the Special first line setting to .2" or .3". This will indent all your paragraphs. I would set line spacing to 1.5 or double, especially if you like to print your manuscript for editing. If you indent the paragraphs, leave the Before and After settings at 0. If you do not indent your paragraphs, change the After setting to 12 pt to give some space between the paragraphs.

To apply a style, put your cursor at the beginning of the paragraph and click the style in the toolbar. You'll see it change immediately. If the style you want does not appear in the toolbar, click the little tiny arrow below the Styles section. Once you pick the first paragraph all the others should be in Normal as you type your story.
A window will open to the left of your document showing all the styles available. You may have to scroll down to find the one you want.
Remember: the font you choose for headings only applies to your preference or the print book. The Kindle version allows the reader to choose the font, font size and line spacing that they prefer.
Comments